to young scientists about the problem of getting funding, and whether the u.s. will be left behind in the research war. "the wall street journal report" begins right now. >> this is america's number one financial news program, "the wall street journal report." now maria bartiromo. >> here is a look at what is making news as we head into a new week on wall street. like most 2-year-olds, it can be cranky and moody. but the bull market celebrated its second birthday this week. the markets hit bottom on march 9th, 2009 after the financial crisis. since then, the dow is up better than 80%. the s&p 500 up better than 90%. but the question is will high oil and gasoline prices derail the rally? crude oil touching two-year highs this week, staying north of the $100 a barrel mark. and gasoline hit an average of $3.52 a gallon last week, 27% higher than a year ago. >>> the markets had choppy week as a result. the dow tanked on thursday, down more than 200 points, its biggest decline since august. on weaker than expected news from china and more worries about the mid east. the markets rebounde

advisers to politicals wrote a letter warning of dire consequences if the u.s. does not get its deficits under control. one of the writers ed lazear who served under president bush from 2006 to 2009. he is currently a professor at stanford university at the hoover institute, and he joins us with more. great to you on the program. >> good to see you again. thank you. >> let me start with that letter. you and those other economists come from all parts of the political spectrum, yet you bring on this. why is it so important? >> well, it's important because the debt will have very significant impact on economic growth. the big problem that we're worried about is right now we stand at a debt to gdp ratio at about 62%. by the end of this year, if the president's budget goes into effect, we'll be talking about 72%. and what the economists warn us, people who have studied this is when we get close to 90%, we have very significant negative effects on our growth. the big problem, of course, is that once we start getting very high debt ratios, we have to service that debt, which means that we have

shouldn't lose focus on is the u.s. economy is doing very well. it's probably growing 3 to 4%. job creation has just notched up quite significantly. we're seeing better retail sales as a result of that. the manufacturing sector is very strong. and i think when this calms down, we're going to be left with that fundamental, which is still pretty good. >> and along those lines, john, it's pretty clear after the last couple of fed meetings that they're no longer concerned about deflation, that they are turning their attention to inflation, which right now statistically they're not that concerned about, even though we did get a pretty strong wholesale price index report this week, and a consumer price index, which is starting to show signs of inflation. what is your view of inflation and the fed policy? >> well, i'm more concerned about inflation than the fed is. i don't think it's just about this artificial concept of core excluding food and energy. >> right. >> i don't think that resonates with the public, with your viewers. they see gas prices every day. they fill the tank once or tw

in the u.s. we are very excited about european interests here in washington d.c. and also canadi interests. >> number one canada, number two, great britain, but you have been tgetingng others as well. you u have a campaign coming up. >> it is an opportunity for us to celebrate a movie that is celebrating its 50th anniversary. for us, it is all thinga battalion. we are collaborating with the italiaian embassy in the community to make sure the entirire wod what a v i italian community does for washington, d.c. there will be an exhibit at the national gallery of art, e huge catyst for us. and then of course, a a lot of restaurants are participating in the celebration. >> i was surprised to learn that tourism is second only to the federal government in terms of dollars generated for our regional economy. i did not know it was quite that high. some people were worried it would take a hit during the recessn. >> the numbers for tourism in washington did suffer slightly because of the recession but i was really relative to other communities that had double- digit decreases overall. we are very fo

and get the economy growing today. >> and you call it a tidal wave of debt facing the u.s., according to your figures. the national debt will soar to 800% gdp? >> those aren't our figures. they're the congressional budget office. the model they use to project the economy going forward crashes in 2037. meaning the cbo can't conceive of any way in which the american economy can continue past 2037 because of the dire debt, because of the debt burden it is policing on the economy. so those are cbo numbers which show we have our own debt crisis coming in america. and so the smart thing to do is preempt this debt crisis, get this under control so we can prosper today and leave our children witha more prosperous future tomorrow. >> which is why your state is seeing what it's seeing, wisconsin in the throes of battle right now, the governor trying to change collective rgaining. tell me about that. where do you stand on that? >> obviously i support what scott walker is trying to do. he is trying to get at the root cause of spending problems in wisconsin. he is trying balance our budget. he doe

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